Industry analysts are predicting a much stronger August for Macau’s casino operators than the more subdued June and July, although concerns over the impact of recent crackdowns on money exchange activities remain an ongoing threat.
Macau’s Gaming Inspection and Coordination Bureau (DICJ) reported industry-wide GGR of MOP$18.6 billion (US$2.31 billion) in July, 5.1% higher than in June although coming in below consensus and below the historical sequential increase.
It was also the second lowest monthly GGR result of the year after June, when gaming revenue was MOP$17.7 billion (US$2.20 billion).
In a Thursday note, Seaport Research analyst Vitaly Umansky forecast August GGR to climb 6.7% month-on-month to US$19.8 billion (US$2.47 billion), aided by a favorable calendar that includes five Fridays, five Saturdays and four Sundays – or 14 “weekend” days compared with only 12 in July.
“August may be a test of the strength of the recovery as both June and July had come in softer than initially expected,” wrote Seaport’s Vitaly Umansky.
“Any major weather events in the region could have a negative impact on revenue and visitation during the summer months (and both August and September have been more prone to typhoon activity).
“Any pick-up in visitation (including package tour visitation which remains only at ~25% of pre-Covid levels) would help drive base mass GGR. We are expecting some pickup in August visitation from the June and July figures.”
Carlo Santarelli of Deutsche Bank is also predicting improvement in August to around US$2.40 billion, which would represent 79% of August 2019 levels and a monthly sequential per day increase of 3.0%.
This, Santarelli added, would compare to the 2.1% average sequential per day improvement seen in August relative to July between 2013 and 2019.
Despite the positive outlook for the month ahead, Umansky said the recent crackdowns on money changers in Macau, along with their networks in China may have some near-term negative headwind on GGR.
“Many of these networks utilize cryptocurrency for money transfer (something that has gained wider attention by authorities in China) along with loan sharking activities,” he said.
“Macau has experienced a rise of criminal activity related to illegal money exchange over the past year. This problem has been raised to a national level in conjunction with China authorities looking at continued use of cryptocurrency to move money out of China (not necessarily tied to Macau).
“We believe this crackdown round is having some negative impact on money flows into Macau and certain individuals have postponed their visits to Macau. The activity will likely continue to be somewhat of a headwind to GGR over the next few months. However, we expect the crackdown to soften and liquidity in Macau to be not significantly impacted in the medium term.”
